The Philippine peso breached the 56-a-dollar-mark while local stocks rose Tuesday as investors continued to cheer the strong second-quarter profits of listed companies and await the Bangko Sentral ng Pilipinas policy decision on Aug. 15.
Japhet Tantiangco, research head of Philstocks Financial Inc., said the strengthening of the peso against the greenback and the positive second-quarter results of listed companies helped lift the market.
The peso closed at 56.96 against the dollar, the strongest in nearly four months, and up from Monday’s 57.316. The local currency has been appreciating against the dollar for nearly four months.
RIzal Commercial Banking Corp. chief economist Michael Ricafort said the peso moved up because of the strong second-quarter economic growth, robust bank loans, better corporate earnings and expected cut in interest rates in the second half of 2024.
Ricafort said the recent remarks by Bangko Sentral ng Pilipinas (BSP) governor Eli Remolona Jr. that a rate cut this month was “a little less likely” also supported the value of the peso.
Meanwhile, the Philippine Stock Exchange index (PSEi) gained 37.08 points, or 0.56 percent, to close at 6,650.44, while the wider all-shares index added 11.46 points, or 0.32 percent, to finish at 3,610.
Remolona said in a public hearing at the Senate inflation rate would fall within 3 percent to 4 percent in 2024 and 2 percent to 4 percent in 2024.
Inflation climbed to 4.4 percent in July on higher electricity rates and positive base effects. Remolona said inflation in August was expected to slow down, driven by low import tariffs on rice.
“The balance of risks to the latest inflation outlook has shifted to the downside, and this is due largely to the implementation of rice tariff reduction,” Remolona said.
He said the monetary policy, with overnight borrowing rate kept at 6.5 percent, also helped to tame inflation.
“We do still face some upside risks to inflation. These risks will come from higher domestic prices of food items other than rice, from transport charges, and from electricity rates,” Remolona said.
“Nonetheless based on the BSP’s latest surveys inflation expectations are well anchored implying that we have to worry less about 2nd round effects of supply shocks,” he said.
Remolona said the BSP would look at economic data during the Monetary Board’s policy meeting Thursday.
“We are looking very hard at the data, and we don’t have a timeline at this moment. We have a policy meeting on Thursday, and in that meeting, we will look very hard on the data and decide when and how much to move the policy rate,” Remolona said.
